GIFTIFY, INC.

Previous wording

Global inflation also increased during 2021 and in 2022. The Russia and Ukraine conflict and other geopolitical conflicts, as well as related international response, have exacerbated inflationary pressures, including causing increases in the price for goods and services and global supply chain disruptions, which have resulted and may continue to result in shortages in food products, materials and services. Such shortages have resulted and may continue to result in inflationary cost increases for labor, fuel, food products, materials and services, and could continue to cause costs to increase as well as result in the scarcity of certain materials. We cannot predict any future trends in the rate of inflation or other negative economic factors or associated increases in our operating costs and how that may impact our business. To the extent we and the restaurant customers we service are unable to recover higher operating costs resulting from inflation or otherwise mitigate the impact of such costs on our and their business, our revenues and gross profit could decrease, and our financial condition and results of operations could be adversely affected.

Current wording

Global inflation also increased during 2021 and in 2022. The Russia and Ukraine conflict and other geopolitical conflicts, as well as related international response, have exacerbated inflationary pressures, including causing increases in the price for goods and services and global supply chain disruptions, which have resulted and may continue to result in shortages in food products, materials and services. Such shortages have resulted and may continue to result in inflationary cost increases for labor, fuel, food products, materials and services, and could continue to cause costs to increase as well as result in the scarcity of certain materials. We cannot predict any future trends in the rate of inflation or other negative economic factors or associated changes in our operating costs and how that may impact our business. To the extent we and the restaurant customers we service are unable to recover higher operating costs resulting from inflation or otherwise mitigate the impact of such costs on our and their business, our revenues and gross profit could decrease, and our financial condition and results of operations could be adversely affected.

Previous wording

The Company has a history of reporting net losses. At March 31, 2025, the Company had cash of $2,121,814 available to fund its operations, including expansion plans, and to service its debt, and a negative working capital of $2,075,999.

Current wording

The Company has a history of reporting net losses. At June 30, 2025, the Company had cash of $3,257,427 available to fund its operations, including expansion plans, and to service its debt, and a negative working capital of $1,710,474.

Previous wording

Cost of sales consists primarily of the cost to purchase merchant gift cards. Cost of sales for the three months ended March 31, 2025 and 2024, were $18,659,017 and $18,237,448, respectively. Gross profit increased $ $285,850, or 9.8%, as compared to the prior year period. Our gross margin, as a percentage of sales, were 14.7% and 13.8%, for the three months ended March 31, 2025 and 2024, respectively.

Current wording

Cost of sales consists primarily of the cost to purchase merchant gift cards. Cost of sales for the three months ended June 30, 2025 and 2024, were $17,045,106 and $16,760,007, respectively. Gross profit increased $595,130, or 18.3%, as compared to the prior year period. Our gross margin, as a percentage of net sales, were 18.4% and 16.3%, for the three months ended June 30, 2025 and 2024, respectively. Our gross margin was positively impacted by the increase in net revenue (agent transactions), as described above, as compared to the prior year period.

Previous wording

Selling, general and administrative expenses were $6,043,841 for the three months ended March 31, 2025, as compared to $5,214,041 for the three months ended March 31, 2024, an increase of $829,800. The increase was from increased stock-based compensation expense of $481,628 during the three months ended March 31, 2025, increased payroll and benefit expenses, and general changes in our business and operations.

Current wording

Selling, general and administrative expenses were $5,714,543 for the three months ended June 30, 2025, as compared to $9,832,270 for the three months ended June 30, 2024, a decrease of $4,117,724. The decrease was due to a decrease in stock-based compensation expense of $4,606,671 during the three months ended June 30, 2025, offset by increased payroll and benefit expenses, marketing and advertising costs, as well as other general expenses to support our business and operations.

Previous wording

Amortization expenses are primarily attributed to the Company’s capitalized software development costs. Amortization expenses were $161,543 during the three months ended March 31, 2025, as compared to $378,737 during the three months ended March 31, 2024.

Current wording

Amortization expenses are primarily attributed to the Company’s capitalized software development costs. Amortization expenses were $161,544 during the three months ended June 30, 2025, as compared to $302,737 during the three months ended June 30, 2025.

Previous wording

Amortization expenses are primarily attributable to the Company’s amortization of intangible assets with finite lives. Amortization expenses were $543,917 during the three months ended March 31, 2025, as compared to amortization expenses of $607,917 during the three months ended March 31 2024.

Current wording

Amortization expenses are primarily attributable to the Company’s amortization of intangible assets with finite lives. Amortization expenses were $557,062 during the three months ended June 30, 2025, as compared to amortization expenses of $607,917 during the three months ended June 30, 2024.

Previous wording

For the three months ended March 31, 2025, we incurred a loss from operations of $ 3,167,665, as compared to a loss from operations of $2,943,419 for the three months ended March 31, 2024. The increase in loss from operations was due to our increased gross profit offset by increased stock-based compensation expense, and operating costs, as discussed above.

Current wording

For the three months ended June 30, 2025, we incurred a loss from operations of $2,577,524, as compared to a loss from operations of $7,482,429 for the three months ended June 30, 2024. The decrease in loss from operations was due to our increased gross profit being offset by decreased stock-based compensation expense as discussed above.

Previous wording

For the three months ended March 31, 2025, we incurred interest expense of $209,571, as compared to interest expense of $247,301 for the three months ended March 31, 2024. The decrease in interest expense was due to our decreased debt balances.

Current wording

For the three months ended June 30, 2025, we incurred interest expense, net of $141,597, as compared to interest expense, net of $261,917 for the three months ended June 30, 2024. The decrease in interest expense was due to our decreased debt balances.

Previous wording

For the three months ended March 31, 2025, we realized an income tax benefit of $159,904 as compared to an income tax benefit of $0 for the three months ended March 31, 2024.

Current wording

For the three months ended June 30, 2025, we realized an income tax benefit of $129,312 as compared to an income tax benefit of $0 for the three months ended June 30, 2024.

Previous wording

We realized a net loss of $3,217,332 for the three months ended March 31, 2025, as compared to a net loss of $3,190,720 for the three months ended March 31, 2024. The increase in net loss was due to our increased gross profit, decreased interest expense, and income tax benefit, offset by increased stock-based compensation expense and operating costs, as discussed above.

Current wording

We realized a net loss of $2,589,809 for the three months ended June 30, 2025, as compared to a net loss of $7,744,646 for the three months ended June 30, 2024. The decrease in net loss was due to our increased gross profit, decreased stock-based compensation expense, decreased interest expense, and an income tax benefit, as discussed above.

Previous wording

**GIFTIFY, INC. AND SUBSDIARIES (FKA RDE, INC.)

Current wording

**GIFTIFY, INC. AND SUBSDIARIES

Previous wording

We have a history of reporting net losses. At March 31, 2025, we had cash of $2,121,814 available to fund our operations, including expansion plans, and to service our debt, and a negative working capital of $2,026,499. We anticipate our cash balance will last until approximately December 2025. As a result, we have concluded that there is substantial doubt about the Company’s ability to continue as a going concern. In addition, the Company’s independent registered public accounting firm has included an explanatory paragraph in their report with respect to this uncertainty that accompanies the Company’s audited consolidated financial statements as of and for the year ended December 31, 2024. The Company’s independent registered public accounting firm, in their report on the Company’s December 31, 2024 audited consolidated financial statements, has expressed substantial doubt about the Company’s ability to continue as a going concern. Our consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.

Current wording

We have a history of reporting net losses. At June 30, 2025, we had cash of $3,257,427 available to fund our operations, including expansion plans, and to service our debt, and a negative working capital of $1,710,474. We anticipate our cash balance will last until December 2025. As a result, we have concluded that there is substantial doubt about the Company’s ability to continue as a going concern. In addition, the Company’s independent registered public accounting firm has included an explanatory paragraph in their report with respect to this uncertainty that accompanies the Company’s audited consolidated financial statements as of and for the year ended December 31, 2024. The Company’s independent registered public accounting firm, in their report on the Company’s December 31, 2024 audited consolidated financial statements, has expressed substantial doubt about the Company’s ability to continue as a going concern. Our consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.

Previous wording

Cash used in operating activities for the three months ended March 31, 2025 was approximately $1,448,924 and consisted of our net loss, adjusted for non-cash items, including amortization of intangible assets, the fair value of vested stock options, common stock issued to executives, employees, and advisors, and routine changes in working capital and other activities.

Current wording

Cash provided by operating activities for the six months ended June 30, 2025 was $289,951 and consisted of our net loss, adjusted for non-cash items, including amortization of intangible assets, the fair value of vested stock options, common stock issued to executives, employees, and advisors, and routine changes in working capital and other activities.

Previous wording

Cash used in operating activities for the three months ended March 31, 2024 was approximately $6,636 and consisted of our net loss, adjusted for non-cash items, including amortization of intangible assets, fair value of vested stock options, and the fair value of common stock issued to executives, employees, and advisors, and routine changes in working capital and other activities.

Current wording

Cash used in operating activities for the six months ended June 30, 2024 was approximately $3,074,200 and consisted of our net loss, adjusted for non-cash items, including amortization of intangible assets, fair value of vested stock options, and the fair value of common stock issued to executives, employees, and advisors, and routine changes in working capital and other activities.

Previous wording

Cash used for investing activities for the three months ended March 31, 2024 was $224,815, which was for capital expenditures.

Current wording

Cash used for investing activities for the six months ended June 30, 2024 was $449,646, which was for capital expenditures for software development costs.

Previous wording

Cash used in financing activities for the three months ended March 31, 2025 was $4,138, which was from proceeds of $1,883,613 on the sale of common stock, net proceeds of $985,000 from a note payable, offset by repayment of our line of credit balance of $122,752, and repayment of our notes payable of $2,750,000.

Current wording

Cash used in financing activities for the six months ended June 30, 2025 was $1,443,909, which was from proceeds of $2,486,202 on the sale of common stock, net proceeds of $985,000 from a note payable, offset by repayment of our line of credit balance of $2,089,183, and repayment of our notes payable of $2,825,928.

Previous wording

Cash provided by financing activities for the three months ended March 31, 2024 was $1,532,535, which was from proceeds of $2,709,000 on the private sale of common stock, less partial repayment of our line of credit balance of $676,465, and payment of $500,000 on our acquisition obligation.

Current wording

Cash provided by financing activities for the six months ended June 30, 2024 was $3,354,563, which was from proceeds of $2,921,500 on the sale of common stock, proceeds from our line of credit balance of $933,063, offset by the payment of $500,000 on our acquisition obligation.

Previous wording

In November 2020, CardCash entered into an amended and restated promissory note for a revolving line of credit with availability of up to $10,000,000. The revolving line of credit is payable on demand, secured by the Company’s inventory, with interest based on the Wall Street Journal Prime Rate plus 3.00%, limited to a floor of 6.5%. At March 31, 2025 and December 31, 2024, the average interest rate was 12% and 12%, respectively. As of March 31, 2025, the Company complied with customary debt covenants. At March 31, 2025 and December 31, 2024, the line of credit requires a deposit of $1,258,826, included in restricted cash.

Current wording

In November 2020, CardCash entered into an amended and restated promissory note for a revolving line of credit with availability of up to $10,000,000. The revolving line of credit is payable on demand, secured by the Company’s inventory, with interest based on the Wall Street Journal Prime Rate plus 3.00%, limited to a floor of 6.5%. At June 30, 2025 and December 31, 2024, the average interest rate was 12% and 12%, respectively. As of June 30, 2025, the Company complied with customary debt covenants. At June 30, 2025, the line of credit requires a deposit of $1,000,000, which is included as restricted cash in cash and cash equivalents.

Previous wording

On November 5, 2018, the Company completed the acquisition of Incumaker, Inc. and assumed certain outstanding convertible notes payable. At December 31, 2024, there was one remaining assumed convertible note payable outstanding that matured July 2017. The Company continues to be unsuccessful in reaching the Note holder to remit payment in full. At December 31, 2024, the principal balance of $20,000, and accrued interest of $23,137, are convertible at $1.50 per share into 28,758 shares of the Company’s common stock. At March 31, 2025, the principal balance of $20,000, and accrued interest of $23,887, are convertible at $1.50 per share into 29,258 shares of the Company’s common stock.

Current wording

On November 5, 2018, the Company completed the acquisition of Incumaker, Inc. and assumed certain outstanding convertible notes payable. At December 31, 2024, there was one remaining assumed convertible note payable outstanding that matured July 2017. The Company continues to be unsuccessful in reaching the Note holder to remit payment in full. At December 31, 2024, the principal balance of $20,000, and accrued interest of $23,137, are convertible at $1.50 per share into 28,758 shares of the Company’s common stock. At June 30, 2025, the principal balance of $20,000, and accrued interest of $24,637, are convertible at $1.50 per share into 29,758 shares of the Company’s common stock.

Previous wording

On February 19, 2025, the Company entered into a secured promissory note with Real World Digital Assets LLC (“Real World”) in the principal amount of $1,000,000 bearing annual interest of 11.5% that has a maturity date of December 31, 2025. The Note has an origination fee and expenses of $15,000, which were recorded as a debt discount and are being amortized over the term of the Note and may be prepaid without penalty. The note is collateralized by a blanket lien on the assets of Giftify under the terms of a security agreement and is subordinated only to the line of credit owed by the Company to Pathward National Association (see Note 7). Proceeds from the note were used to pay the remaining balance owed on the secured promissory note with Spars Capital (See Note 9). As of March 31, 2025, the notes payable had a principal balance outstanding of $1,000,000, a debt discount balance of $12,857, and accrued interest payable of $12,918.

Current wording

On February 19, 2025, the Company entered into a secured promissory note with Real World Digital Assets LLC (“Real World”) in the principal amount of $1,000,000 bearing annual interest of 11.5% that has a maturity date of December 31, 2025. The Note has an origination fee and expenses of $15,000, which were recorded as a debt discount and are being amortized over the term of the Note and may be prepaid without penalty. The note is collateralized by a blanket lien on the assets of Giftify under the terms of a security agreement and is subordinated only to the line of credit owed by the Company to Pathward National Association (see Note 7). Proceeds from the note were used to pay the remaining balance owed on the secured promissory note with Spars Capital (See Note 9). As of June 30, 2025, the notes payable had a principal balance outstanding of $1,000,000, a debt discount balance of $8,571, and accrued interest payable of $41,589.

Previous wording

The loans bear interest at 3.75% per annum, with a combined repayment of principal and interest of $3,500 per month beginning 12 months from the date of the promissory note over a period of 30 years. As of December 31, 2024, the note payable had a principal balance outstanding of $664,500 and accrued interest payable of $15,558.

Current wording

The loans bear interest at 3.75% per annum, with a combined repayment of principal and interest of $3,500 per month beginning 12 months from the date of the promissory note over a period of 30 years. As of December 31, 2024, the note payable had a principal balance outstanding of $664,500 and accrued interest payable of $15,558. As of June 30, 2025, the note payable had a principal balance outstanding of $664,500 and accrued interest payable of $4,899.